They are always with us, waiting in the shadows, waiting for their time. Isabel Allende's vioce, heard last week on Radio Three describing the murderers and torturers who held Chile in thrall for 15 years, and forced her into exile, is passionate, sombre, warning. It compels attention. In conversation she is funny, charming, above all optimistic. The theme of her life and work is reconciliation. She has borne witness to one of the most evil events of our times and she knows that there is a need for forgiving.

She is political; her books, she insists, are not. She is not, she says self-deprecatingly, 'very accurate' with history. 'Life is political and in Latin American literature politics are always present. I write the hidden history of love, sex, passion. I am not interested in the economic reasons that produce historical events; there are others who have been studying for 15 years. I am interested in what happens to the people. To my mother, my cousin, the women in the streets, the children. And that is never in any of the official textbooks.'

On her father's side, Isabel Allende comes from a radical socialist family. Her mother's family, while liberal intellectually ('We could read pornography if we wanted'), were politically conservative. Her grandfather owned enormous tracts of land in southern Chile and Agentina. Her grandmother 'protected a whole bunch of people' - artists, bohemiams, poor people who constantly filled the huge house in Santiago where Isabel spent the first 10 years of her life and which, in essence, she recreated in her first novel, The House Of The Spirits.

Besides her stern patriarchal grandfather and her clairvoyant grandmother, it sheltered her mother and two 'crazy' uncles. One she describes as very intellectual, very open-minded, a lover of books - 'The house was a tunnel of books.' The other went to India, became a fakir and returned wearing a loincloth and eating carrots.

That first, sprawling, richly imaginative book spanned four generations from the 1900s to the first brutal months of repression in Chile which followed the US-backed military coup in 1973 when the government of Isabel's uncle, Salvador Allende, was overthrown and he was murdered. She fled the country 18 months later.

Influenced by Gabriel Garcia Marquez and in the same literary tradition of Latin American magic realism, The House Of The Spirits, crowded with haunting characters and fantastic events, shows how the seeds of violence and inhumanity, planted in the past, slumber in the dark and bloom to shape the present. Allende's second novel, Of Love And Shadows, was similarly rooted in Chilean history. Life under Pinochet's dictatorship was revealed through the love story of a young journalist and the photographer in whose company she discovers the hidden corpses of some of those murdered by the security forces.

At least 11,000 Chileans died in the terror. Most of Isabel's relatives were imprisoned or managed to flee. At first, she thought it could not last, that sanity must speedily reassert itself. The coup was supposed to end the socialist revolution (in fact a democratically elected government); surely the soldiers would return to their barracks within a week and elections would be held.

'Imagine,' she says, 'there is a coup in Britain - Chile has been a democracy for as long as Britain. How long do you think it will take the population just to understand what is going on? You think the world has a set of values and, all of a sudden, everything changes.' Like thousands of others, she began to help the Church in its humanitarian work in the slums and, although this was subversive and dangerous, conducting other endangered people to asylum in an embassy.

She also began to record the experiences of the people she met. She had been a journalist since she left school at 16 and sort of fell into that profession. 'I was a very bad journalist,' she exclaims. 'Awful. I would just invent everything. If I did an interview, I had a preconception of what that person should say and I would put my words in his mouth.'

She worked for eight years on Paula, a magazine which campaigned for divorce and abortion - very radical in 1960s Chile. Like other journalists, she secretly interviewed (with an improved technique) the regime's victims 'because some day we would have democracy back and our evidence would help to bring to justice the murderers and torturers'.

'I had an afternoon chat show so my face had been on the television screen every week for years. And I was called Allende. So after the coup many people would stop me in the street and ask for help and, once you get involved in these things, you can't step back.' Eventually the stress and constant fear made her ill and, in 1975, she left for Venezuela with her husband and two children.

Torn from the 'nourishment' of tradition, family, geography, she first found exile very painful. 'But it has turned out to be a wonderful experience. Initially, I felt adrift, cut away from everything that was nurturing. So memories became extremely important; the past became extremely important. But then I discovered that roots are not in a landscape, or a country, or a people; they're usually inside yourself.'

The House Of The Spirits was almost accidental. In 1980 she learned that her 100-year-old grandfather was dying. 'I started writing a spiritual letter to tell him that people only die when you forget them and that I would never forget him.' To prove she had forgotten nothing, she began with the first anecdote he had told her as a child: 'The story of Aunt Rosa, his first fiancee, who had died, poisoned by mistake, we kept her photography on the piano. Then all the other characters stepped into the book and I couldn't stop them.'

Eva Luna, her new novel, contains many of the ingredients that made the first one so pleasurable: vibrant, colourful characters; the ordinary fused with the grotesque; a Latin American setting, tropical this time; vivid, elegant narrative. The narrator, Eva Luna, is herself a story-teller in the Allende tradition. What we learn about her is only through the stories she tells of those in her life.

The book can be read on several levels. It could be the soap opera that Eva Luna is writing; some passages are kitsch in the style of the Latin American soaps that saturate the radio and television. It could be her autobiography. It could also be the story that she is inventing about her own life. At one point she says: 'I write as I would like the world to be.' And the ending is ambivalent; is it invented or is it real?

'In a way, she transforms reality, and that's what the book is about,' explains Isabel Allende. 'How you can take a plain, maybe painful, life and paint it in bright colours. It's about story-telling and being a woman. I've been a story-teller all my life but I realised it only recently. I have been a woman for 46 years and I only recently realised I can't change it and I like it.

'I wrote Eva Luna out of pure celebration of life. I enjoyed every line of it. It was not a happy time in my life. I had just divorced my husband after 25 years and this book gave me all the joy I was needing.'

Now she is in love. She married an American last year and moved from Caracas to San Francisco to live with him and his 11-year-old son. She has always, in her work and particularly in her female characters, expressed love, courage, determination and forgiveness. Her new happiness has reinforced her essential optimism.

'In Of Love And Shadows, the two lovers have a very tragic experience, but the last words are: 'We will return.' And they do. In my own life I've seen that. As I crossed the Cordillera mountains on a beautiful spring day and I saw Chile for the last time, I thought: 'I'll come back.' It took me 15 years. This is what life is about. The circle is closed and it's an optimistic ending.

'I'm living in California but I have a place that is mine in Chile and I belong there. I am no longer an exile.'